Home' A Plus Magazine : September 2013 Contents 60 September 2013
In today’s finance lesson, we are going
to talk about penalty clauses and other
examples of creative fantasy fiction.
Clauses guaranteeing cash compensa-
tion for nonfulfillment of contracts add cool
plot twists to dull transactions, because they
are always either ridiculously high or ridicu-
lously low, due to quantum mechanics or
some such thing.
Example: farmers in the Indian state of
Haryana had a right to compensation after
floods destroyed their crops. After waiting
two years, the cheques recently rolled in.
They were for amounts such as two rupees,
which is worth one of those little Hong Kong
20 cent coins that everyone hates. You can’t
buy much for this, even in rural India: just
a couple of houses and 2,000 head of cattle.
No, I’m joking. Even in India, 20 cents isn’t a
lot. The compensation money was less than
the cost of the farmers’ bus fare to go into
town to cash the cheques. Worse still, they
had to open bank accounts – and to do that
cost 500 rupees in bank charges.
In other words, the people in suits who
wrote the penalty clauses, structured them
so that the farmers’ compensation turned
out to be minus 498 rupees each. But let’s
not get too angry at the professional classes.
The truth is, it’s still better to have penalty
compensation clauses than not. At least the
farmers got a moral victory. To not even get
that really hurts.
Case in point: the same week that the
news broke about the farmers’ compensa-
tion, the case of Roewe Lok Wai came before
the District Court in Hong Kong.
Lok had been a happily married father
of two with his own construction business,
but his life changed after he paid a large fee
for a consultation with a feng shui master in
The geomancer told Lok that if he stayed
in this city, he would be moderately suc-
cessful and his son would “only” rise to the
height of chief executive of Hong Kong.
Ew! Lok didn’t like that idea. A man’s gotta
have ambition, right? If the family moved
to China, the feng shui master continued,
Lok would become a billionaire and his son
would become a world leader, and the family
would live richly and happily ever after.
Sounds legit, Lok thought, and obedi-
ently moved to the Mainland – where he
promptly lost his business, his wife, custody
of his children, and all his savings. Every-
thing the feng shui master had told him was
w rong. But their deal had no penalty clause.
Unable to get compensation or a moral vic-
tory, the enraged Lok set fire to the feng shui
master’s office and lost the last thing he had –
A moral victory would have made all the
difference. Instead of being in jail, he would
be a penniless and friendless no-hoper wan-
dering the streets, like, for example, the aver-
age columnist. It’s not a bad life once you get
used to it.
Now, if you have invested several min-
utes of your life reading this article and dis-
covered that you already knew everything
in it, I am happy to offer you cash compensa-
tion. You can have two rupees. Simply take
a bus to my office and pay me 500 rupees
and I will immediately give you two back in
Nury Vittachi is a bestselling author, columnist, lecturer and
TV host. He wrote three storybooks for the Institute, May
Moon and the Secrets of the CPAs, May Moon Rescues the
World Economy and May Moon’s Book of Choices.
Get your daily dose of Nury’s humour at www.mrjam.org
Let’s get fiscal
The importance of
Compensation clauses give moral
victories rather than financial ones,
says Nury Vittachi
for nonfulfillment of
contracts add cool
plot twists to dull
Links Archive August 2013 October 2013 Navigation Previous Page Next Page